from the watch-this-space dept

Well here's a story that's more than a decade in the making. Way back in 2003, we first wrote about Antigua filing for sanctions against the US for its ban on online gambling. Antigua argued (with fairly strong support) that this violated a trade agreement between the US and Antigua, by blocking a form of free trade. The case was at the WTO for years, bouncing around. In 2004, the WTO ruled against the US, which the US promptly ignored. In 2005, the WTO again ruled in favor of Antigua on the issue, and the US (stunningly) responded by pretending that it had won, when it most clearly had not. Following that, the US pretended that it could just unilaterally change its free trade agreement to carve out gambling. Not surprisingly, Antigua (and the WTO) found that to be problematic.

It goes without saying that the US is big and powerful and Antigua... is not. So, as it became clear that the US intended to ignore any WTO ruling, people began to wonder if there was any remedy for Antigua over this issue. Normally, the WTO could do something with trade sanctions against the US and in favor of Antigua, but given how much Antigua relies on US trade, that would likely hurt Antigua a lot more than the US. Somewhere in the midst of this -- around 2006 -- someone somewhere floated the idea that one way that Antigua could be made whole would be to allow it to ignore US copyright laws, allowing it to "sell" copyrighted content on the cheap, without paying any royalties. That idea took on a life of its own and Antigua began pushing the idea itself around 2007. The world community started to side with Antigua over this, recognizing that the US was being completely unfair here... and the US did what the US does, and bought off a bunch of big countries to get them to shut up and stop supporting Antigua.

In late 2007, the WTO finally said that this plan of retaliatory copyright infringement could go forward in Antigua, but limited to just $21 million worth of infringement. Even so, the US immediately warned Antigua not to even think about it, or it would retaliate. There were some negotiations between the two countries that went nowhere and then... a lot of nothing. We've barely touched on the story since 2008 when Antigua once again threatened to (no, really this time!) launch a copyright infringing store with "permission" from the WTO. But, that didn't happen.

However, reports are now coming out that Antigua finally has plans in place to launch just such a store. Of course, we'll believe it when we see it, considering the decade-long posturing over this issue. Oh yeah, and, once again, the US is warning Antigua not to move forward, claiming that Antigua is acting in "bad faith" and launching the store might "serve to postpone the final resolution of this matter." Considering that the US lost at the WTO nearly a decade ago, and still hasn't "resolved" the matter, that's a fairly ridiculous claim. And, of course, the US is threatening to "retaliate" if Antigua goes forward:

"In these circumstances, Antigua has no justification for taking any retaliatory actions against the United States. Moreover, if Antigua actually proceeds with a plan for its government to authorize the theft of intellectual property, it would only serve to hurt Antigua’s own interests. Government-authorized piracy would undermine chances for a settlement that would provide real benefits to Antigua. It also would serve as a major impediment to foreign investment in the Antiguan economy, particularly in high-tech industries."

So, the short version from the US's point of view is that it's fine to ignore its own trade agreements that wrecked a significant part of Antigua's economy -- but as soon as Antigua fights back and wins, it's not allowed to make use of WTO-approved remedies after years and years of the US refusing to fix its abuses. And somehow when it finally (years and years later) moves forward with this other plan... the US argues that it would harm its international obligations? The hubris from the US is (once again) incredible, if not particularly surprising.

from the hello-compulsory-licenses dept

India has an interesting relationship with pharmaceutical patents. In 1970, India did away with drug patents entirely, believing it would help create a domestic drug industry. And it worked. As we discussed in the past:

2,237 licensed drug manufacturers in 1969-1970 grew to 16,000 by 1991-1993, production of drugs grew at an average rate of 14.4% per year from 1980 to 1993, India became a net exporter of pharmaceutical products, and the market share of foreign multinational corporations (MNCs) dropped from 80-90% to 40% (Fink 2005). In 1995, six of the top ten pharmaceutical firms in India were domestic, and employment in the sector had reached half a million people

Now, remember how people say that without intellectual property, industries protected by those monopolies collapse? Yeah, the opposite happened in India. And yes, many were producing generic versions, but not all of them were. Either way, despite all of this success, the international community, pressured by the big pharmaceutical firms, cracked down on such practices, and demanded that if anyone wanted to join the WTO -- an important organization for large countries to be a part of -- they had to recognize pharmaceutical patents as per the TRIPS agreement. India finally did so in 2005.

However, one key point in TRIPS that developing countries such as India and Brazil have paid close attention to is the fact that they can force a compulsory license on a drug patent holder in the interest of public health.

For the first time since re-instating patents on pharmaceuticals, India has granted just such a compulsory license, covering a kidney and liver cancer drug marketed under the name Nexavar. Indian generic drug company Natco requested a license, noting that Nexavar was in short supply in India and exceptionally expensive. A typical dosage costs around $70,000 per year in India -- something Bayer says is necessary to recoup the drug's R&D costs. However, reports show that it cost less than $300 million to develop this drug (not to mention that the US government subsidized the process) and Bayer has already made billions selling the drug around the world. In a detailed ruling (pdf and embedded below), India's Controller of Patents (nice title) granted Natco the right to make the same drug, requiring it to sell it at a significantly lower price than Bayer sells Nexavar for, and then pay back to Bayer a 6% royalty rate (which is actually at the high end of what the UN recommends). Natco has to make the drug itself and can't name it Nexavar, make it look the same or even state that it's the same as Nexavar -- but it can make its own version of the drug and sell it, and the license lasts the life of the patent. Bayer can and almost certainly will appeal, but this is going to be interesting to watch for a few reasons.

The real question here is how the US will react to this. The Obama administration has been trying to exempt drugs that treat non-communicable diseases (such as cancer medication!) from such compulsory license rights. In the meantime, the big (non-Indian) drug companies have been working hard to lock up the Indian drug market with patents. Not surprisingly, the Obama administration and the big drug companies have a cozy relationship when it comes to dealing with patents in India.

It's likely that you'll start to hear some rumblings from the US government about how this kind of ruling is a "problem" and how India isn't "respecting" international patent law. Expect to see diplomatic pressure placed on India to put limits on its compulsory licensing program, and potentially even noises about how India has to change its patent laws to "update" them and "harmonize" them with the world. Also don't be surprised if stuff like this leads India to jump up the charts on next year's Special 301 reports from the USTR, which list "naughty" countries. It's probably too late to make it into this year's list for this particular move. Is it really any wonder that India is so worried about ACTA? It knows that ACTA is entirely about ratcheting up enforcement, without any exceptions for things like this where something as important as saving lives comes into play.

from the probably-not dept

Neelie Kroes, currently VP of the European Commission (and previously EU Commissioner of competition), is apparently claiming that China's Great Firewall of internet censorship is really a trade issue, that should be reviewed by the WTO for trade violations. This isn't the first time this has been suggested, but previous discussions never went anywhere. Now, restricting access to web information and websites can certainly be a trade issue. The fact that many of the websites blocked by China are foreign-run businesses, you can make an argument that China is protecting local companies. But, China has a pretty big trump card: it doesn't care. The WTO could rule however it wants, and China will just say that it's not a trade issue, but rather a way of protecting citizens from content it deems dangerous -- and will then point to Australia's attempted internet censorship along with things like ACTA, to point out that lots of countries seek to put limitations on internet content they deem "bad." So call it what you want, it doesn't seem likely that any WTO action will convince China to change.

from the ip-retaliation dept

Two years ago, we noted that Brazil had asked the WTO for permission to ignore certain US patents and copyrights as a retaliation against the US's refusal to abide by a WTO ruling. This is, of course, typical of the US. When the WTO sides with the US on certain issues, you see the US and industry lobbyists go nuts about how those countries need to capitulate due to "international obligations." But when the WTO rules against the US, the USTR has a long history of ignoring the ruling or even pretending (falsely) that it "won." Given that most countries can't do much if the US just ignores the WTO, there's been a new push to allow countries to ignore US copyrights and patents up to a certain dollar amount. In Antigua, for example, the WTO said it could ignore up to $21 million worth of US IP.

Brazil is now moving forward with a plan to actually ignore US patents and copyrights. It's putting forth a retaliation plan to the WTO that includes various tariffs and other sanctions -- but most interestingly, a plan to ignore $238 million annually in US copyrights and patents -- expected to cover both pharmaceutical patents and entertainment copyrights. As is typical in such situations, the USTR is wagging its finger and warning, "don't do that," but doesn't seem willing to admit that the WTO already ruled against the US.

from the china-probably-doesn't-care dept

Back in January, the WTO ruled against the US in an intellectual property dispute with China. Well, to be specific, there were three issues being discussed, and on the two important ones, the US lost. On the final, not particularly important one, the US won. But, as it has done before, the US took that and declared victory, leading to all sorts of headlines claiming that the US had "won" a trade dispute with China. So, when similar headlines showed up, again with the US claiming victory, it seemed worth exploring in more detail. You can read the full WTO report, where you'll see how highly technical this specific argument was, and note that, indeed, the WTO basically upheld the earlier rulings, with minor (mostly meaningless) exception.

So, the US does get to declare "victory" on this particular issue, but it's unlikely that China really cares. Also, it's more than a bit ironic that the US suddenly acts like a WTO ruling like this is meaningful. It's also striking to hear US Trade Rep Ron Kirk claim that "We expect China to respond promptly to these findings and bring its measures into compliance," when the US itself continues to ignore similar WTO rulings against the US when it comes to online gambling in Antigua. For the US to act like the WTO rulings mean something, shouldn't it need to live up to those rulings when it loses as well?

from the so-much-for-that-plan dept

Well, this wasn't difficult to predict at all. As noted last week, a company named Zookz clearly stretched and misinterpreted the WTO rulings in the dispute between Antigua and the US. Given the sheer number of emails their high-end PR people have been dumping my way, the fact that they were making a mockery of the ruling was part of the plan to get them press attention. Of course, they might not have expected the Antiguan gov't to quickly step up and point out that it didn't support Zookz either. So the latest is that Zookz has shut down the site and promised to return money to anyone who subscribed. They claim that they'll be back, but I wouldn't count on it. At least not in any form similar to what they originally advertised.

from the not-everyone-agrees dept

It's been quite some time since we last heard anything about the fascinating battle between the US and Antigua. It goes back a long time. We first wrote about this issue, nearly a decade ago, when the operators of online casinos in Antigua (where gambling is legal) were pretty pissed off to find out that the US claimed to have regulatory power over their online casino and could ban its use in the US. Antigua protested to the WTO, claiming that this was a violation of free trade agreements between the two countries. In 2004, the WTO agreed with Antigua, saying that because the US allows certain types of gambling, it's a violation of their agreement to ban Antiguan gambling sites. Of course, the US ignored the WTO and Antigua, recognizing that Antigua had little to no power over the US.

A year later, the WTO ruled again in favor of Antigua on this issue, though, amusingly, the US Trade Rep misleadingly claimed that the WTO had changed its mind. It had not. The US simply lied about what the WTO really said and declared victory, when it had actually lost again. The following year? The WTO again asked the US why it wasn't living up to its trade obligations on this point. In 2007, the WTO tried again and was ignored again.

In the midst of all this, a rather amusing and interesting suggestion popped up. In the random online discussions about how Antigua could actually flex its muscles against the US, someone pointed out that the WTO could allow Antigua to ignore US intellectual property, thereby allowing it to set up a cheap online download store. That idea gained traction at an incredibly fast pace, as lawyers jumped on the idea and set the wheels in motion. During that time, the US tried to unilaterally change its trade terms with Antigua to settle the matter, but that didn't get very far. Finally, at the end of 2007, the WTO agreed to letting Antigua ignore US intellectual property, but only to the tune of $21 million. Of course, the US quickly threatened Antigua not to go forward with any plans to violate US IP, but did little to rectify the situation. So last year, Antigua insisted it really (really, really, really!) was going to start ignoring US IP.

Since then? Well, it's been really quiet. Until now.

The LA Times has the story of a site called Zookz (from Carib Media), which claims to be taking advantage of the WTO ruling. It is, in fact, based in Antigua and is offering up unlimited music or movie downloads for $10/month -- or both music and movies for $18. Needless to say, the US government and the entertainment industry are vehemently opposed to Zookz interpretation of the WTO ruling -- especially when it comes to the fact that the Zookz service is apparently available outside of Antigua. Honestly, it seems like both sides are stretching the meaning of the ruling. The US and the entertainment industry basically want to completely ignore the WTO ruling, and interpret it to be entirely meaningless. That makes no sense, of course. The WTO wouldn't allow such sanctions unless there were a way to actually make use of them.

That said, it doesn't seem like the WTO ruling gave random private companies carte blanche to offer up music and movies. In fact, the Zookz interpretation gets even odder, where it interprets the $21 million to mean how much it can make, rather than the value "lost" to the industry. In fact, because of this Zookz claims that if it gets too close to selling $21 million (or if others enter the market, and combined they approach $21 million), they'll just have to start giving music and movies away for free to avoid going over the limit. While the WTO did want to give Antigua a weapon against the US, it's hard to believe that was what it meant. So, while this may be amusing to watch, the likelihood of Zookz lasting very long seems slim, at best.

from the it-lost-badly dept

You may recall a few years ago that in the (still ongoing!) fight between Antigua and the US at the World Trade Organization (WTO), that the WTO came out with a ruling where the US declared immediate victory, though the details showed that actually the WTO had sided with Antigua. The US merely declared victory, and got its (wrong) story out to the press first.

Perhaps that's because if you actually read through the details, you realize, as Michael Geist points out, that the US actually lost very badly. There were three issues at stake -- and the only one the US "won" was the most minor of the three. On the two big issues, concerning China's border measures concerning counterfeit goods and its IP enforcement system within the country, the WTO sided strongly with China, and chastised the US for providing rather bogus "evidence" (often consisting of newspaper articles, rather than actual evidence) in support of its position. It seems like the only mainstream publication that actually bothered to read the report, rather than the USTR's "day is night" version of the events was Forbes, who notes that the USTR was being misleading in claiming victory. Of course, given how the US acted after it lost the Antigua case in the WTO, we can expect the US to appeal the ruling or... just ignore it and continue pretending the WTO actually ruled in its favor.

What's really interesting here, though is the ongoing recognition that this is an effective way to retaliate against US efforts to break treaties or laws. With a country like Antigua, which has little else it can do, it might not be that surprising. But seeing a much larger country like Brazil take this approach seriously may lead to it showing up in many more places as well.

from the stand-your-ground dept

The back and forth battle between the US and Antigua is long and involved. You can read the background if you want, but the short version is that the US suddenly claimed that Antigua-based online gambling sites were in violation of US anti-gambling laws. Antigua took offense at this, and noted that it appeared to violate free trade agreements between the two countries, most specifically because the US still allowed certainly types of domestic online gambling. The issue went to the WTO multiple times, and every time Antigua won -- and every time the US ignored the decision. At one point, the US pretended it won the ruling, and another time it announced that it was simply, unilaterally, changing its trade agreement with Antigua.

Since Antigua has little leverage against the US, it started to look at other options -- and took serious an idea that some folks first suggested in jest: if the US keeps ignoring the WTO rulings, let Antigua ignore US intellectual property rights. Antigua took this plan to the WTO, and the WTO approved it -- though, limited it to only $21 million worth of intellectual property, which given industry accounting probably represents half an album or so. Either way, the US threatened Antigua not to follow through on this plan, even though the WTO approved it -- and the two sides agreed to negotiate a settlement, with a deadline of today, June 6th.

Well, here we are, and Antigua is saying that (can you believe it?) the US appears to be taking a hardline position on this whole thing and no settlement is expected. It will be interesting to see if Antigua really follows through on ignoring US intellectual property, and how it goes about doing so. Also, it will be worth watching to see how they "count" just how much intellectual property they're ignoring. I'm assuming they won't use RIAA math.